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Ethics in Estate Planning

As estate planning attorneys we help families solve difficult issues. Oftentimes issues of ethics come up, whether it is interpersonal issues within a family or how an estate planning scenario plays out. We strive to always do not only what’s right and what’s in the best interests of our clients. We are guided by a set of principles and ethics. Last week we attended an Estate Planning Strategies Conference in Anaheim California to connect with other estate planning professionals and to keep up with the latest trends and best practices in estate planning. At the conference we took part in a session on Ethics in Estate Planning. As participants we were invited to engage in ethical dilemma exercises that explored complex ethical situations. We discussed some key issues in ethics, such as ethics in financial services, how people make ethical decisions, including the way social norms influence ethical decision-making, and

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The Importance of Updating Your Will

Creating a last will and testament is a vital step in safeguarding your assets and ensuring your wishes are honored after your passing. Despite the fact that many people procrastinate on this important task, the mere act of having a will puts you ahead of the majority. According to the 2024 Wills and Estate Planning Study by Caring.com, only one-third of Americans have prepared a will. This statistic underscores the necessity of not only drafting a will but also keeping it current.  Updating your will is crucial during various life changes. Major life events, such as marriage, divorce, or the birth of a child, often necessitate a review of your estate planning documents. These changes can significantly impact how your assets should be distributed and who should be responsible for executing your wishes. Additionally, if a beneficiary experiences a major life change—like a marriage, divorce, or the birth of a

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Estate Planning Awareness Week October 21-27: A Reminder to Make a Plan for The Future

National Estate Planning Awareness Week is observed from October 21st-27th 2024. It’s an annual reminder that everyone – regardless of age or financial status – should have a plan for the future. A solid plan allows you to protect your assets, provide for your loved ones, and create a legacy. Estate planning is about more than just safeguarding your assets; it’s about ensuring your loved ones are taken care of and that your legacy reflects your values and wishes. Estate planning is for everyone, even college kids who have just turned 18. If you have college age kids who have started college this year, talk to them about making a plan that includes an advanced medical directive that allows you to make medical decisions for your child should they become incapacitated. They may also need financial power of attorney, and a Financial Educational Rights and Privacy Act (FERPA) waiver. A

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What are the Benefits of a Grantor Retained Annuity Trust (GRAT)?

A Grantor Retained Annuity Trust (GRAT) is an excellent option for individuals looking to transfer wealth to heirs while minimizing gift and estate tax liabilities. By establishing a GRAT, the grantor transfers assets into the trust and retains the right to receive fixed annuity payments over a set term, typically two to ten years. If the assets appreciate at a rate greater than the IRS’s assumed rate, the excess value passes to beneficiaries tax-free, providing significant savings. This strategy is particularly effective in low-interest environments or when high-growth assets are expected to appreciate substantially. One thing to be aware of however, is that if the grantor passes away during the trust term, any assets remaining in the trust might be included in their estate, which might erase some of the benefits of the GRAT. Careful planning is required to ensure that the full tax advantages apply to your estate. A

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When to Choose an Intentionally Defective Grantor Trust (IDGT)

An Intentionally Defective Grantor Trust (IDGT) is a useful tool for families and individuals who have appreciating assets, such as a family business or real estate. It allows the grantor to transfer appreciating assets, while minimizing tax exposure. By establishing an IDGT, the grantor pays income taxes on trust assets, allowing them to grow tax-free for the benefit of future generations. The unique structure significantly reduces the size of the grantor’s estate while shifting valuable assets out of it, avoiding substantial estate taxes down the line. An intentionally defective grantor trust is drafted using language that contains “intentional defects.” These are provisions that make the trust meet the definition of a revocable trust for income tax purposes, while also being considered an irrevocable trust for estate tax purposes. For a revocable trust, income is usually taxed to the grantor of the trust who is treated as the owner for tax

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